Defense Department Ends Aid to Minority Firms

Since 1987 the Pentagon has used the "rule of two" when awarding contracts. The rule states that if two or more qualified small disadvantaged firms indicate interest in bidding for a contract, then only disadvantaged firms may compete for it. Last yea r, the rule resulted in $1 billion in federal business going to minority firms. In the first action resulting from President Clinton's affirmative action legal review, the Defense Department announced that it plans to suspend the rule, partly because it became legally vulnerable after this summer's Supreme Court Adarand v. Pena decision. As minorities own the majority of these disadvantaged firms, this decision seriously and negatively impacts their bidding prospects.